The biggest names in US tech have invested about $17 billion in India since the start of 2020 Amazon (AMZN) promised $1bn in January, Facebook (FB) spent almost $6bn in late April, and Google (GOOGL) overtook them all last week with a $10bn investment. They ‘re part of this year’s surge of investment in India’s tech industry now well over $20 billion, with much of it coming from the US.
The size and sources of those investments would have seemed highly unlikely, if not entirely impossible, just months ago when all those technology giants were on a collision course with Indian regulators and tech CEOs on visits to New Delhi were getting the cold shoulder.
Since then much has changed. The coronavirus tore through the global economy and hit India particularly hard. India’s diplomatic spat with China has spilled over into tech, aligning it with the Chinese companies’ own mistrust of the Trump administration. And while India has always been a major draw for tech firms in the US, the shrinking potential for tech collaboration with China and new challenges to its foothold in places like Hong Kong are giving the Indian market new significance. For any company related query of the United Kingdom, you can do Company Check here.
But the investment flood also illustrates something that has been valid for years now: India’s digital economy, with more than 700 million internet users and about half a billion yet to come online, is just too great an opportunity for Great Tech to be overlooked for a long time. “People are optimistic that India will be a successful market in the long term, that its regulations will be fair and clear enough in the long term,” said Jay Gullish, who heads the US-India Business Council advocacy group ‘s tech policy. “I guess these are all … expanding already existing roots.”
The factor for China.
For years, Silicon Valley has been effectively shut out of China due in part to the country ‘s vast system of censorship called the Great Firewall. And a controversial new national security law introduced in Hong Kong, where the services of Google and Facebook are still accessible because of its fairly unfettered internet, could drive them further.
The law gives broad power to Hong Kong authorities to control tech platforms, including forcing them to take down posts that endanger China’s national security or block access to its services. Facebook, Google, and Twitter have said they would avoid exchanging data with the government of Hong Kong, while TikTok has left the city entirely.
“It’s increasingly difficult to do business with China,” said Mark Lemley, director of the law, science, and technology program at Stanford University. “There is also a growing sense of troubling moral compromises involving doing business with China.
There is an increasing US mistrust of Chinese tech. President Donald Trump took credit last week to thwart Chinese tech company Huawei’s expansion plans and his administration said it’s “looking at” banning immensely successful short-form video device TikTok, owned by ByteDance in China.
It’s a step that would align the US with India just further. The Indian government banned TikTok and hundreds of Chinese apps last month, leading to demands for a boycott of Chinese goods after a border dispute between the two countries that left 20 Indian soldiers dead. And while India ‘s tech relationship with China continues to run deep — Chinese smartphones dominate the Indian market, and several of India’s largest startups have significant Chinese investment — recent tensions could boost India’s long-standing tech links with the US.
“India and its Southeast Asian neighbors have sought to balance the two forces by establishing greater economic relations with China while maintaining the United States’ security umbrella,” said Ravi Shankar Chaturvedi, Research Director at the Center for Business in the Global Context at Tufts University. “China has effectively delivered the US to India for a generation thanks to recent actions.”
Chaturvedi and other experts point out that India and the US have a long-standing tech relationship, with thousands of Indian engineers currently working throughout Silicon Valley and Indians at the helm of Google, Microsoft and several other US companies.
“In the digital realm, there is a natural synergy between India and the United States,” Gullish said, adding that boosting the internet use of Indian households who socialize and work more from their homes during the coronavirus pandemic may further enhance India’s market appeal. “It’s convenient for American businesses to search for opportunities in India,” he said.
When US tech companies were eying the market for India, Asia ‘s wealthiest man appeared to put himself as a willing gatekeeper. Most of this year’s tech investment in India — including all of Facebook’s and almost half of Google’s — has gone into Indian billionaire Mukesh Ambani ‘s corporate coffers. Since late April, Jio Platforms, the digital subsidiary of Ambani’s conglomerate Reliance, has raised more than $20 billion from businesses, venture capitalists and sovereign wealth funds seeking to use it as a fast gateway to the vast digital economy in India.
In 2016, Jio debuted as a telecommunications network and rapidly acquired nearly 400 million subscribers. Ambani appears to be looking to transform the business into an all-encompassing Indian ecosystem with recent forays into e-commerce, digital payments, streaming services, and even a Zoom-like video conference network called JioMeet.
“US tech wasn’t able to penetrate the ‘Great Firewall of China’ but it was easier for it to reach Jio’s ‘Great Paywall of India;’ all it had to do was pay Reliance the toll fees to join,” Chaturvedi said. As one of India’s biggest companies owned by the richest man in the world, Reliance has a tremendous amount of local influence and is untouched by many of the data storage and e-commerce regulations that have become roadblocks for Facebook, Google, and Amazon.
“No global entrant could have managed this on their own as successfully and as swiftly as Reliance has,” Chaturvedi said. “Much of the laws governing e-commerce and data localization have been influenced by Reliance.” According to Lemley, as the Trump administration is gradually shutting the US economy off the rest of the world, Silicon Valley must look afield to extend its scope. And India is ready to pick.”The US is not nearly as enticing an environment for creativity as it was five years ago as it hurts me to say it,” Lemley said. “As the Trump administration makes it harder and harder to bring the best and brightest people from all over the world to Silicon Valley, I think tech companies may look to a future in which we are no longer the hub of innovation.”